The industry for this research will be the telecommunications sector. The industry has consistently been at the center of innovation and growth and has also culminated in the disruption of other industries. Its key elements encompass mobile devices, as well as, broadband connectivity that has also been regarded as important fabrics of the current society which is the information age. The sector has been instrumental in promoting the momentum for other notable technological trends such as video streaming and mobile payments. In this regard, the publicly traded corporation in the telecommunication industry that will be subject to this discussion is Apple Inc.
It is first imperative noting that the telecommunications industry is mammoth and comprises of entities manufacturing hardware, software and providing other important services in communication. Some of these activities encompass the manufacture of a variety of commodities which enable communication to occur in the whole world. The services offered include managing switches that control phone systems, accessibility of the internet and conducting the configuration of private networks through which businesses conduct their trades. As it appears, the telecommunications industry is vital for enabling worldwide communication.
The company, Apple Inc. is a technological multinational that is of the American origin. It is headquartered in California. It was founded in 1976 and carries out the design, development, and sale of computer software, operating systems, and electronics. In 2012, Apple attained the status of the most valuable public entity in the world by boasting of the biggest market value to be held by a public company. (O'Grady, 2009) To complete the research; therefore, a presentation of the important segments of the environment, forces of competition, the strengths and weaknesses of Apple and the determination of its resources of capabilities will be made. It will be in addition to the analysis of its capabilities, resources, and core competencies.
Segments of the general environment
The first segment of the general environment ranking highest in its influence of Apple Inc. is the political segment. The political environment in the US is significant to Apple because it is amongst the American technological organizations which have accumulated large amounts of wealth. That has generated calls from different players to apply a greater corporate tax stemming from the fact that income inequality is a crucial political issue in the US. Also, Apple Inc. has overtime become a heavy dependent of the low-cost manufacturing in China. However, political unrests in China have the propensity of disrupting the manufacturing processes or even increasing the associated costs. There have also been concerns that the dominative position held by Apple on particular segments such as music could culminate in political pressures, as well as, antitrust concerns that can immeasurably limit its market or break the organization.
The other segment of the general market ranking highest is the economic sphere. The increasing costs of labor in China are continuously threatening to cripple the cost advantages that the Apple products seem to enjoy. There is also the aspect of stagnation of the incomes of the middle class in some developed nations such as America. It threatens to shrink Apple's potential market particularly for the high-end products. Lastly, the relatively strong position of the dollar is making it very expensive for Apple Inc. to continue with its trade in the critical markets located in Europe and even China.
Forces of competition
The first most significant force of competition for Apple Inc. is the strong force associated with the bargaining powers of Apple’s clients. The strong force has a higher likelihood of impacting the business of the company. As a component of competition, the factor determines the ways in which Apple’s buyers will impact the business. In this case, the strong force is as a result of a relatively low switching costs and the minimal size of the individual clients. It thus means that the customers can easily change brands consequently giving them the power to compel entities such as Apple Inc. to adhere to the desired levels of customer satisfaction. With the ability of buyers to shift to other technological firms in the industry such as Samsung and LG, Apple must thus consistently include their buyer's bargaining potential in the development of its strategies.
Bach (2007) mentions that the second important competitive force for Apple is the capability of potential new entrants in this market. Even though there is a high capital requirement for a new entrant, there are big companies which have the financial muscle for entering this market and impacting the operations of Apple. These firms mostly reduce the market share of Apple. Some of the firms that have destabilized Apple include Google and Samsung. Google became a new entrant through the introduction of Nexus smartphones while Samsung has a broad portfolio of brands directly competing with Apple. These examples are important in proving that there are firms that harbor a great capacity to compete directly with Apple Inc.
Addressing the competitive forces
Apple Inc. must be in a position of addressing the forces of competition especially the ones that are primary to its performance above. On the first account, the company can sort out the external segment related to the strong force of the buyers’ bargaining power by diverting its attention to service and product quality. In this case, the products offered by Apple would be of a superior quality thus making the customers get their desired value. When the company improves on the quality of its commodities, incidences of return purchases will be experienced. However, the products from Apple Inc. have often been known to be of good quality. It is because of this that their costs are always very high. Service quality also encompasses conducting constant upgrades in its systems.
Addressing the threat of new entrants into the telecommunications industry is also imperative. Apple Inc. can attain this through the establishment of the entry barriers that would be used in discouraging new companies from entering this market. Apple Inc. can ensure this happens through the establishment of a great customer loyalty program which will make it difficult for the new entrants in the market to attract and retail customers. There are also cost advantages that can be utilized by Apple Inc. Such encompass transferring its production centers to other regions other than China to benefit from the affordable labor. The companies that are just starting up may be lacking in terms of the capital and expertise required as setting up a company like Apple needs a huge might, resources and time. Therefore, with these recommendations, Apple Inc. can comfortable alleviate its challenges of competition.
Threats and opportunities
Threats have the propensity of reducing organizations’ financial performance. In the case of Apple Inc., the most significant threats encompass aggressive competition, imitation and the consistently increasing costs of labor. The difficult competition magnificent in the telecommunication industry is as a result of the aggressive nature of the companies. Apple is in competition with other entities such as Samsung that also have massive innovative capacities. There is also a substantial threat of imitation because several companies harbor the potential of partially or wholly imitating its commodities. Lastly, the increasing cost of production is threatening to decrease the profits or increase the selling prices of the Apple devices and services. The most serious threat amongst the above is the aggressive competition by similar companies. To address it, it would be necessary for Apple to inculcate a strong fundamental for the maintenance of its competitive advantage.
The opportunities in any company will have a formidable impact on the direction likely to be undertaken by the company. For Apple, its opportunities include expansion of its distribution networks, increasing demands for its smartphones, as well as, tablets and lastly the establishment of new product lines. The opportunity of expanding the company’s distribution network can assist it in reaching more clients in the international market. Also, Apple has very successful product lines. However, through the increase in its innovation, the company can introduce more products just as has been achieved through the development of the Apple watch. From this, the most serious opportunity is the introduction of more product lines. It will also enable Apple Inc. stretch its market further particularly to those markets that have shown enormous potential for growth.
Strengths and weaknesses
Apple has significant strengths that enable it withstand the weaknesses in its environment. The company is regarded as a strong and valuable brand in the world. As an important strength, Apple Inc. can harness it for purposes of introducing new and profitable products. The other strength of Apple is its maintenance of a higher pricing strategy that enables it to achieve high profitability. As a major strength, it permits Apple to become flexible and consequently adjust the prices of its products while still maintaining a higher profitability margin. The strategy that should be selected so that the company realizes the most benefit from its strengths is the inculcation of the concept of innovation in its processes. Having the latest technology has the propensity of ensuring that Apple achieves a desirable competitive advantage in its markets.
The weaknesses of Apple Inc. encompass the inadequacies that deter the company from optimally achieving its potential of production. The weaknesses have mostly served as business growth obstacles. Some of the most notable weaknesses of Apple encompass a higher selling price than most of its competitors, limitation to the high-end market and lastly a limited network of distribution. The latter weakness stems from the nature of the company's policies since they have been tailored to become exclusive. Even though the strategy of exclusivity promotes Apple's control on the distribution of its products, it puts a limitation on its market reach. However, the most significant weakness that should be addressed by the company is the high prices of its commodities. This aspect limits purchases from the lower class customers who form the majority of any market. To address this, the company should introduce tailor-made products that can substantially suit the needs of this market having a comparatively lower pricing.
Resources, capabilities and core competencies
The most significant capabilities, as well as, resources of Apple Inc., include Steve Jobs who is the chief executive officer and the hardware and software systems that have been developed by the company leading to massive successes. The technical, creativity and engineering capabilities have been largely responsible for the competitive advantages that have been attained by Apple Inc. The company’s capabilities supersede those of its competitors thus enabling it to continually attract and retain more customers.
The designers, engineers and also programmers are a representation of the critical resources of Apple because it is them who enable the creation and workability of Apple’s ecosystem made up of the software and hardware products. As important resources of the firm, they have enabled the creation of competitive advantages responsible for the large revenues that is earned by Apple yearly. (Wingfield, 2012)
Barney (1995) notes that the core competency of Apple is on its innovative technologies that it applies in the manufacture of its products such as iPhone, iPod, and the iMac. Besides, the production of electronic records, movies, music, and videos have also assisted Apple Inc. in gaining a considerable brand recognition. In fact, the company is regarded as the most admirable entity in the United States. Other critical competencies of Apple Inc. encompass the strong financial performance and marketing teams and a high-quality service.
Apple’s value chain
The first aspect of Apple’s value chain is the services that it offers. It is in the public domain that Apple offers exceptional quality in its services. Its sales representatives have mainly been trained in offering the required services to the customers. The other element of the company’s value chain is its employees. The Firm currently has approximately ninety-two thousand fulltime workers and an additional four thousand part-timers. These aspects can be used in creating value using the resources, core competencies and capabilities above through their effective management to ensure that the firm’s production is improved.
Conclusion
In conclusion, the above article has presented a discussion on the telecommunication industry with Apple Inc. being the publicly traded organization of choice. The research has discussed the political and the economic segments as being primary in its external environment. It has also discussed the bargaining powers of its buyers and the potential of new entrants as the most significant forces of competition. Ways that Apple Inc. can use in addressing the forces of competition above has also been presented. Lastly, the article above has given a SWOT analysis of Apple, its key competencies, resources and capabilities and the value chain in relation to the latter aspects.
References
Bach, B. (2007). Implications of enabling technologies for Apple Inc. (1st Ed.). München: GRIN Verlag GmbH.
Barney, J. (1995). Looking inside for competitive advantage. Academy Of Management Perspectives, 9(4), 49-61. http://dx.doi.org/10.5465/ame.1995.9512032192
O'Grady, J. (2009). Apple Inc. (1st Ed.). Westport, Conn.: Greenwood Press.
Wingfield, N. (2012). Apple Becomes the Most Valuable Public Company Ever, With an Asterisk. Bits Blog. Retrieved 16 January 2017, from https://bits.blogs.nytimes.com/2012/08/20/apple-becomes-the-most-valuable-public-company-ever-with-an-asterisk/?_r=0
